Financial Crisis Committee Hearing In Full Swing, Goldman Sachs (NYSE: GS) CEO Blankfein Faces Questions, Bank of America (NYSE: BAC) CEO Moynihan Still On Deck

The Financial Crisis Inquiry Commission began its public hearing Wednesday with executives from the nation’s top banks.  The Bipartisan panel has already began questioning Goldman Sachs (NYSE: GS) CEO Lloyd Blankfein and is set to speak with Bank of America (NYSE: BAC) CEO Brian Moynihan, JP Morgan (NYSE: JPM) Chief Jamie Dimon as well as Morgan Stanley (NYSE: MS) CEO John Mack.

Phil Angelides, chairman of the committee called to order the first public hearing at 9 a.m. ET and stated that “people are angry,” adding “the fact that Wall Street is enjoying record profits and bonuses in the wake of receiving trillions in government assistance.”  

Shortly after, Angelides asked the executives of the four banks to swear under oath they would tell the truth.  The four men complied, at which point the questioning began.

Goldman CEO Blankfein issued a prepared statement to go along with any additional testimony.  In that statement he addressed the firms risk management and offered the below statement.

“As I look back prior to the beginning and throughout the course of the crisis, we never knew at any moment if asset prices would deteriorate further, or had declined too much and would snap back.  Having to fair value our assets on a daily basis and seeing the marking in our P&L forced us to risk regardless of markets or individual views.”

Though several items were covered, the commission mainly grilled Blankfein on Goldman Sachs’ practice of packaging securities, securing strong ratings from credit rating firms and selling those securities to investors, only to turn around and take a contrarian position on those investments with its own capital.

Angelides challenged Blankfein on the ethics of this practice as it basically looks as if the bank was pushing bad securities to investors and betting that those investments would sour on the buyers.

However, Blankfein stuck to his standard answer that the practice was standard on Wall Street and it part of the firm’s risk management.  Angelides pushed further asking if Goldman Sachs disclosed its contrary investments to its clients, which Blankfein failed to answer.

As of 12 p.m. ET the commission is still questioning Blankfein, mostly recently on Wall Street’s view of “to big to fail” banks and if they believe government would step in if one of the nation’s top banks was tittering.